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Pratim Ranjan Bose

Proceeds to be used to retire Rs 10,000-cr borrowings

Kolkata , April 18

Having received oil bonds worth Rs 6,500 crore, Indian Oil may sell the entire bouquet of short-term (three-year) bonds worth Rs 2,200 crore in the secondary market.

The company has sold bonds worth Rs 730 crore in the market at a cut-off price of Rs 99.80 (per Rs 100 worth of bonds).

After considering the sale expenses, the net realised value stands at Rs 99.73. The proceeds from bond sales will be utilised to retire the short-term borrowings of over Rs 10,000 crore.

Apart from short-term, the company has medium-term (six years) and long-term (nine years) oil bonds. Since these bonds fetch a lower price, the company has pledged the same with Clearing Corporation of India Ltd ensuring returns at the rate of call money market.

Good demand

"The short-term bonds are now witnessing good demand in the market. Accordingly, we have sold Rs 730-crore of bonds at a nominal loss. If prices continue at the same level, we will off-load more short-term bonds in the secondary market," informed sources in IOC told Business Line.

Net profit

About the profits in the last fiscal, the sources said that despite mounting under-recoveries the company was able to maintain profits at the level of 2004-05. IOC registered Rs 4,891-crore net profit in 2004-05.

With crude oil prices ruling at a record high, IOC (and other oil marketing companies) are witnessing higher under-recoveries.

According to company sources, the under-recoveries in motor spirit are now as high as Rs 5 per litre and that of high-speed diesel Rs 7 per litre.

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IOC may sell more short-term bonds

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